Toyota banking on weak yen, better U.S. sales for profit boost

TOKYO (Reuters) - Toyota Motor Corp (7203.T) lifted its annual profit guidance, banking on stronger sales in its key U.S. market and a boost from a weaker yen, which put its Japanese manufacturing in the black for the first time in five years.

But the world's best-selling automaker, which shipped a record number of cars last year, said it would not build any new factories over the next three years despite the pickup in its fortunes, after it was burned in the financial crisis.

Toyota raised its net profit forecast for the year to March by more than 10 percent to 860 billion yen ($9.3 billion) on strong U.S. sales of the Camry sedan and other vehicles.

"If the current weak yen trend continues, the company's profit will likely sharply rise for the next fiscal year as well," said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management.

"If a recovery in the U.S. economy serves as a tailwind, its stock price has more upside."

The firm said it expected to ship 2.2 million vehicles in the U.S. this calendar year, up almost 6 percent from last year's figure.

Among Japan's big three automakers Toyota, Nissan Motor Co (7201.T) and Honda Motor Co (7267.T), analysts see top seller Toyota as the most likely to benefit from a weakening yen because it has the highest ratio of production in Japan, more than half of which it exports.

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Japanese operations, including domestic manufacturing for export, used to generate about half of Toyota's profit, but they started losing money after the Lehman Brothers crisis of 2008, until the yen's recent weakening put them back into the black.

The yen is trading around 92 to the dollar, compared with 78 at the start of October. The weaker the Japanese currency, the more money exporters make when they convert overseas profits back into yen.

By contrast, Toyota's South Korean rival Hyundai Motor Co (005380.KS), which including its affiliate Kia Motors Corp (000270.KS) is ranked fifth in global sales, last month posted a surprise quarterly profit drop as a stronger won dented its overseas earnings.

Last week, Honda announced a third-quarter profit that was less than the market had expected, but believed the weaker yen would help to absorb the impact of poor demand in China and Europe.

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In 2013, Toyota expects to sell 8.9 million vehicles globally. Across the group, which includes Daihatsu Motor Co 7262.T and Hino Motors Ltd (7205.T), it forecasts shipping 9.91 million vehicles.

Last year, the 75-year-old firm sold a record 8.72 million vehicles around the world. Its group-wide sales were also a record high of 9.75 million vehicles, beating General Motors Co (GM.N) to regain top rank among car manufacturers.

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Still, Toyota does not plan to dramatically ramp up production in the weak-yen environment.

"We're getting rid of that way of doing business," he said, adding that the firm did not plan to build new plants for the next three years.

Toyota posted net profit of 99.9 billion yen for the three months to December 31, up 23.5 percent from a year ago but below the average estimate of 143.7 billion yen among seven analysts polled by Thomson Reuters I/B/E/S.

Behind the poorer-than-expected third quarter performance was the cost of settling a class action lawsuit in the United States over claims that millions of Toyota cars accelerate unintentionally.

Shares in Toyota have risen nearly 50 percent since mid-November on hopes the weakening yen will boost its bottom line, nearly double the 28 percent rise in Tokyo's benchmark Nikkei average .N225 over the same period.

Toyota shares ended down 1.2 percent on Tuesday at 4,540 yen before the earnings announcement, performing better than the Nikkei, which dropped 1.9 percent.